Lectura 5: Economy Geography a contemporary introduction Part 1

Coe, Neil,
Kelly, Philip,
Yeung, Henry
2007

A GEOGRAPHICAL APPROACH TO THE ECONOMY
Geographical perspective on the economy

In 2005, Niger in West Africa seemed to be on the brink of widespread famine. More than three million people (around one-third of the country's population) were suffering from severe hunger. While crops had been planted, by the middle of 2005 they were still a few months away from being harvested and food stocks from the previous harvest were running dangerously low. Those stocks were smaller than usual because of a drought and locust infestation in 2004, which resulted in reduced yields.

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Geographical approach to the economy

1.2 Poverty and economics: Explaining what went wrong

We pick up the story in Niger again by returning to the PBS broadcast. After hearing from its reporter on the ground, the programme then turned to a guest expert, an, economist, for further insight into the looming famine. We will quote at length from the exchange that ensued as it illustrates how the crisis was understood (and how the media sought to construct that understanding).

Where does this exchange leave our understanding of famine in Niger? Is it simply an economic problem of food shortage and high food prices? The inssues of drought and locusts are again raised to explain poor harvests – the role of natural disaster is never far away. Nevertheless, the correspondent’s earlier point about the famine being a problem of poverty rather than food production is reiterated. Ultimately, then, this is an economic problem rather than an environmental one, but the root causes of poverty itself are not actually addressed in this exchange. We are told that people starve because they are poor, but we are not told, ultimately, why they are poor in the first place. Instead, the discussion moves on to address two issues – the response to the crisis and the longer-term solutions that might be found. With respect to crisis response, the difficulties of getting food aid into the more remote parts of the country are acknowledged, but the abilities of the Niger government to manage crisis and use aid efficiently are also questioned. On the longer – term solutions to the problem, we are told that the core problem is a lack of productivity in Niger’s economy. Such productivity increases, we are told, will come from investment in people and infrastructure. In short, what Niger needs is capital investment, and such investment has to come from the ¨international community¨.

This is not a perspective that is unusual. Jeffrey Sachs, a high–profile economist who advises the Secretary-General of the United Nations (UN) on development issues, has argued that ¨ending poverty is a grand moral task, and a geopolitical imperative, but at the core, it is a relatively straightforward investment proposition¨ (Sachs, 2005a; our emphasis). Sachs goes on to suggest that if the USA and its rich allies fulfil their long-standing pledge to provide 0.7 per cent of their national income to finance development aid, we can win the war against extreme poverty. For Sachs, however, the root causes of poverty are ¨geographical. In his book, the End of Poverty (2005b), Sachs argues that ¨geography is destiny¨. A country will be poor if it has a location that is inaccessible, an environment that is prone to disease, ann extreme climate, and fragile soils:

In all corners of the world, the poor face structural challenges that keep them from getting even their first foot on the ladder of development. Most societies with the right ingredients – good harbors, close contacts with the rich world, favorable climates, adequate energy sources and freedom from epidemic disease – have escaped extreme poverty.
(Sachs, 2005c: 47)

The required investment, then, is to overcome the natural disadvantages dealt by geography.

International financial institutions are inclined to agree. In a diagnosis that has direct implications for the investment that is available to a country such as Niger, the International Monetary Fund (IMF) and the World Bank provide a specific list of factors that explain the country’s poverty: ¨limited resources, the climatic conditions, the weak development of income-generating activities in rural areas, strong demographic growth, the scarcity of arable land and environment degradation, as well as the inadequacy of basic infrastructures¨ (IMF, 2005: 8). Thus, climate, natural resources, environmental degradation and scarcity of land are all seen as natural ¨limits¨ on growth. In fact, in the list provided in this puote, only demographic growth and basic infrastructure can actually be addressed. The answer, therefore, is to control population growth and to build infrastructure to attract capital investment. Once again, we are back to the need to invest capital in order to grow , and the sources of such capital are international investors like the World Bank.

All these diagnoses represent the application of prevailing economic orthodoxy to the specific case of Niger. It is a powerful, yet simplifying, orthodoxy that tends to homogenize the economic world in a way that economic geographers try to avoid. We identify four components to the economic orthodoxy.

The first is universalism, which implies a one-size-fits-all approach to poverty, development and other economic processes. It is represented by the belief that economic processes will work the same in every context and that growth will result from the right stimuli. Basic health, education and infrastructure are seen as the precursors to inevitable growth based on whatever natural advantages a country might have (which in the case of Niger, might relate to mineral resources and a labour force that is plentiful and very inexpensive). Furthermore, growth is assumed to move along a trajectory of development in which countries gradually become more and more like those industrialized countries from which such diagnoses are made. Hence, for example, the notion in the interview quoted above that Niger is not a democracy like us ¨just yet¨, but is on the path towards that goal.

The second assumption evident here is that economic rationality always prevails. In many ways, this is an extension of idea of universalism. For economic principles to apply everywhere, it is necessary to assume that people will respond in predictable and rational ways to ¨market signals¨. Individuals are treated as isolated actors who make judgements in order to maximize their economic gains. Under this assumption, it is, for example, seen as ¨natural¨ and expected that food traders in the market should demand massively inflated prices for food even while some people go hungry – self-interest is ¨normal¨. This assumption thus makes the concept of famine in the context of food availability a notable nut perfectly understandable phenomenon. The problem is seen as being located in the inability of certain people to pay for the food rather than the artificially high cost the food.

The third assumption concerns competition and equilibrium – the notion that the market mechanism will always find the greatest efficiency and productivity. It is a basic principle of economics that equilibrium can be achieved through perfect competition efficiency when supply meets demand at a particular price. Thus, by opening up to international investment, Niger will be incorporated into a global economic system that will naturally find the sources of growth that are appropriate to that context – exporting raw materials from the uranium mining industry, for example. As Niger competes in the global economy, we are told that it will inevitably benefit.

The final assumption is that economic processes are based on certain laws and principle. This relates closely to the previous three points, but it also draws attention to the assumption that practitioners of economic ¨science¨ have insights into the predictability and operation of certain fundamental processes. These processes are often, therefore, reduced to formal statistical models in which only quantifiable processes can be accommodated. The insights of economics are often taken, however, to be the equivalent of the expertise of natural scientists concerning processes in physics and chemistry. Thus, while PBS sought a description of the situation from its reporter on the ground, it turned to an economist for expert analysis of the reasons behind the crisis.